Scooters have captured a little more than a third of the domestic two-wheeler market for the first time in about a decade.
Sustained double-digit growth in scooter sales year after year has inched up its share to about 34 per cent in the world’s biggest two-wheeler market. Motorcycle sales, commanding about 70 per cent of share in 2013-14 (FY14), is now down to 62 per cent. Mopeds form a measly four per cent of two-wheelers. Motorcycles sales have grown only five per cent between FY14 and FY17, while scooter volumes have zoomed about 55 per cent during the period. India is getting scooterised like never before, said Y S Guleria, Senior Vice-President, Sales and Marketing, Honda Motorcycle & Scooter India (HMSI). “The segment contributed only 12 per cent to industry in FY07. It is now contributing 34 per cent, while the motorcycle contribution has declined from 83 per cent to 63 per cent in this period.” Honda is the largest player in the domestic market, with 61 per cent share. The domestic scooter market has expanded 25 per cent in the first two months (April-May) of FY18, to 1.15 million units. In the period, motorcycles grew four per cent to 2.09 million units. Scooters are leading the expansion of the two-wheeler market. “The trend of the first two months is an indication of the future growth story in scooters,” said Guleria.
More Indian customers are now choosing scooters over mass motorcycles as their first two-wheeler model. Experts say scooter could well account for 40 per cent of the market in the next two to three years, leaving motorcycles with approximately 55 per cent. “Scooters have had more than 50 per cent in the past. So, there is historical headroom for growth. At least a two percentage point shift is taking place annually. It might not take long to reach 40 per cent,” said Aniruddha Haldar, Vice-President, Marketing (Scooters) TVS Motor, the second biggest scooter player. An important pillar for growth in scooters will come from markets outside cities, primary centre of demand till now. Improvement of roads in rural markets will help companies expand reach in these untapped areas. Honda last week launched its first scooter for the country.
It has positioned the two-wheeler for buyers in semi-urban and rural markets. The 110cc scooter, Cliq, comes with block pattern tyres (for extra grip on patchy roads), flat footboard (for more legroom) and bigger under-seat storage. It has an optional rear carrier for carrying load. It has been priced at Rs 42,499 against its previous entry-level price of Rs 51,855.
“Cliq is a perfect blend of practicality and value for money,” said Guleria. More companies could develop such products. Haldar said there are opportunities waiting to get tapped in the scooter market and its emerging sub-segments. “A rural buyer needs a vehicle that can handle his usage conditions. If there is a consumer need that evolves, we will cater to it. We are working on a few of these,” he added.
Two-Wheeler sales in India has faced some challenging times in calendar year 2016. The first six months of the year saw some good sales and a robust growth and just when it looked like the industry will post a double digit growth both urban and rural market sales dropped primarily due to demonetisation. According to Society of Indian Automobile Manufacturers (SIAM) report, the top ten two wheeler manufacturers combined to sell a total of over 1.70 crore two-wheelers in 2016 as against 1.55 crore units in CY 2015, thereby registering a growth of 9.1 percent. India’s largest two-wheeler manufacturer Hero Motocorp sold over 65.80 lakh units registering a growth of 4.5 per cent. The company sold about 62.96 lakh units in Jan-Dec 2015 period. Following up with Hero is its former business partner Honda Motorcycles and Scooter India (HMSI), which registered a growth of 9.6 per cent by selling over 47.27 lakh units as against 43.14 lakh units in CY 2015.
Hosur based TVS Motor Company continued at the 3rd sport. The company grew by over 15 per cent by selling over 24.83 lakh two-wheelers in the domestic market in CY 2016 as compared to 21.45 lakh two-wheelers in the same period of 2015. TVS reintroduced its Victor 110 motorcycle and also launched Apache RTR200 4V in the Indian market in 2016. KN Radhakrishnan, President & Chief Executive Officer, TVS Motor Company, said, “The automobile industry maintained a steady growth trajectory this year and projections expect the two-wheeler industry to witness steady growth in 2017. Positive consumer sentiment from the rural market due to good monsoons and benefits from pay revisions further catalysed sales and resulted in better than average festive season uptake across product categories for the entire industry.”
"We expect future growth to come from premium segment of motorcycles and commuter segment will be occupied by scooters. With right policy initiatives, strong consumer sentiment and a conducive manufacturing environment, the Indian automobile sector will continue to contribute significantly to the overall economic success.” Pune based two-wheeler manufacturer Bajaj Auto's aggressive strategy to get in more reasonable sports bikes with its Pulsar brand and cruiser motorcycles with the Avenger brand has helped the company to grow over 13.8 per cent by selling over 20.56 lakh unit motorcycles in 2016. Yamaha and Royal Enfield also posted a growth of 32.3 per cent and 40 per cent respectively. Mahindra did make some noise in 2016 by acquiring JAWA and BSA but its 2-wheeler business degrew by -54.2 per cent . The company sold 69,106 units in 2016 as against 1.51 lakh units in CY 2015.
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*The reports names are based on SIAM July 2016 sales numbers compared with June 2017.